Athena Peralta has worked for the National Economic and Development Authority of the Philippines and is presently a consultant for the Manila-based Poverty, Wealth and Ecology Project of the World Council of Churches (WCC). She earned a Bachelor of Science in economics from the University of the Philippines, a Master of Arts in development studies and a postgraduate diploma from Erasmus University in The Hague, Netherlands. Before joining the WCC in 2002, she was Senior Economic Development Specialist at the National Economic and Development Authority (NEDA) of the Philippines.

I. Introduction: current socio-economic realities

Do we need a new global economic ethics? A reflective response to this question has to be framed by contemporary socio-economic realities characterised by unprecedented economic, social and ecological emergencies.

By now the story is familiar to many of us but bears repeating. In the immediate aftermath of the global financial meltdown of 2007-2009, hundreds of millions of people around the world lost their homes, life savings, pensions and jobs. Almost overnight the ranks of the homeless, hungry and impoverished expanded substantially.

The effects of the crisis are still felt to this day. Much of Europe remains in the grip of a painful recession. The unemployment rate in the region (12%) is twice higher than the world average, and in countries like Greece and Spain, it is soaring well above 20 percent (ILO 2013). Youth unemployment statistics paint an even scarier picture, hitting 60 percent in Greece. The human and social costs of joblessness and government austerity measures – child malnutrition, disease, substance-abuse, suicide, violence against women and children, xenophobia – are climbing. The freshly released report of the International Labour Organisation (2013) aptly entitled “Repairing the Economic and Social Fabric” points out that prevailing economic tensions are likely to fuel further social unrest. And though the recent focus has been on wealthier economies, we ought not to forget that for decades, poor and indebted nations in Africa, Asia and Latin America had suffered and continue to suffer the same appalling conditions following Structural Adjustment Programmes imposed by international financial institutions.

Despite the current global financial and economic turmoil, however, our world has never been more prosperous: in 2010, global wealth actually grew to US$120 trillion or an increase of 20 percent from the pre-crisis period (Pushra and Burke, eds. 2011).

At the same time, our world has never been more unequal: the ratio between the average income of the richest 5 percent and poorest 5 percent presently stands at 165:1 (Pushra and Burke, eds. 2011). Indeed, in wealthy countries, income inequalities have widened further since 2010 as top incomes continued their upward trend (ILO 2013). Millionaires and their households, which comprise a mere one percent of all households, now account for more than 40 percent of total wealth – a development that Paul Pierson and Jacob Hacker (2010) described as “the hyper-concentration of income” particularly in the case of the United States. In stark contrast, around 200 million people had no means of earning an income in 2012 – at least 28 million more than in 2007 (or before the crisis) – and nearly a billion people continue to subsist in poverty, unable to meet their most basic needs (food, water, and shelter) necessary for survival and a dignified life (ILO 2013).

The movement towards greater inequality in the last three decades has also been attended by another incredibly worrying development: the extensive degradation of our ecosystems. This is now happening at a pace that is hurting the Earth’s capacity to nurture life. We know that our planet’s resources and capacity for absorbing waste and pollution are finite. Yet the most recent data shows that global consumption has already exceeded the planet’s regenerative limits by nearly 50 percent (Global Footprint Network 2013). Affluent nations and classes have used up more than their fair share of the global atmospheric and other ecological commons in achieving and maintaining their current standards of living. Yet the first to suffer the consequences of a rapidly warming climate, deforestation and water pollution are impoverished people, women, farmers and fisher folk eking out a living from the environment and possessing limited resources for adaptation.

II. The moral and ethical roots of the global financial and economic crisis

Ethics, the former Archbishop of Canterbury, Rowan Williams (2009), reminded us “is about negotiating conditions in which the most vulnerable are not abandoned.” Yet even as we, in faith-based organisations, struggle to provide protection for the weakest in these hard times, there is the simultaneous and critical task of scrutinising the prevailing ‘set-up’ which in the first place generated the current context of intertwined crises. The crises we face – their disproportionately heavy impacts on those who have scant socio-economic security to begin with – have to serve as an important wake-up call and opening to examine our larger ‘economic operating system’ – that is: our current models of investment, production, consumption, trading and distribution – from a different perspective. We must not only ask the question: “What went wrong?” More significantly, we must ask: “What are our financial and economic systems for anyway?” Because the answer to the former question just might be connected to the latter question.

Much has been written on the sources of the global financial and economic crash, though in this presentation I will favour some analyses over others. The Financial Crisis Inquiry Commission (FCIC 2011) in the United States, the epicentre of the crisis, acknowledged the occurrence of a “systemic breakdown in accountability and ethics.” Nobel prize-winner Joseph Stiglitz (2010) explained that the crisis started with greedy banks creating speculative credits that inundated Western economies with new money; this cheap money encouraged governments to spend on large programmes without increasing the fiscal burden of their citizens, thereby ballooning government debt. Jeffrey Sachs (2010) noted that “deregulation” of inherently unstable financial markets and “ideology” (or an absolute faith in the efficiency and self-correcting nature of markets) played a significant part, but also underlined the corruptive power of money. He said: “This power of great wealth was able to achieve – through lobbying and campaign contributions – the kind of deregulated environment that allowed tens of billions of dollars of bonuses to be paid on Wall Street each year, while the time bomb of an unregulated derivatives market was allowed to expand to tens of trillions of dollars until it finally burst and created havoc in the world economy.” More recently, global inequalities have been recognised as a key factor contributing to the crisis: over-consumption coupled with declining median wages led to chronic macroeconomic deficits and household indebtedness in the United States, the world’s largest economy; while in China, the 2nd largest economy, the low share of wages to national income boosted savings and capital account surpluses (Puschra and Burke, eds. 2011). Overall, the United Nations Conference on Trade and Development (2009) made the following observation in the report entitled “The Global Economic Crisis: Systemic Failures and Multilateral Remedies”: “No doubt without the greed of too many agents trying to squeeze double-digit returns out of an economic system that grows only in the lower single-digit range, the crisis would not have erupted with such force.”

In the face of the aforementioned comments, it is difficult to argue that economics is a value-free, objective, and rational science, though modern economics tends to rely heavily on mathematical models and quantitative methods to support such a claim. Indeed, the aforementioned ‘mainstream’ analysts have touched on something essential, yet something that is still sorely lacking consideration in the current discourse dominating the global economic decision-making echelons. And that is how rampant greed lies at the root of the crises confronting our world today.

Placing the blame on avaricious bankers and brokers who in seeking quick and easy profits took on risky investments is, however, too facile. The problem of greed does not rest merely at the level of individual behaviour and individual value systems that are based on the belief that personal well-being and happiness rest primarily on the accumulation of money and property and the consumption of material goods.

The problem is more complex and pervasive: it is both structural and cultural. To begin with, we have to understand what our reigning capitalist financial and economic models are intrinsically geared towards: expanding individual income and consumption, maximising shareholder value or generating the highest possible corporate returns in the shortest timeframe, and limitlessly growing the gross national product. In pursuit of these goals, we have turned a blind eye to, and even intentionally externalised, the enormous social and ecological debts that the economic system produces. We have put in place financial and economic arrangements which reward, enable, demand and presume the expression of greed on the part of individuals, groups and institutions, such that, according to Konrad Raiser (in Peralta and Mshana, eds. 2013, forthcoming), we can now speak of ‘structural greed’ or ‘institutionalised greed’ that is resulting in the “structural deprivation of the conditions of life in dignity for the majority of people.”

In late 2009, the World Council of Churches (WCC) convened a small group of theologians, economists and other social scientists to study closely the phenomenon of greed. One of the group’s findings is that ‘structural greed’ or ‘institutionalised greed’ appears to work in tandem with a ‘culture of greed’ that is shaping collective thinking and behaviour (Peralta and Mshana, eds. 2013, forthcoming). A ‘culture of greed’ does not only suggest captivity within a cultural pattern of consumerism. It denotes the entire array of values, symbolic representations and collective norms which impart legitimacy to a structural framework founded on the inexorable accumulation of material goods, capital and power.

In the February 2010 edition of CBS’ “Money Watch”, Robert Pagliarini sermonised: “Greed is good. Embrace it, love it. In fact greed may be the one thing that can save us….[So] stop putting yourself last, and stop sacrificing your goals and dreams. Tap into your inner Gordon Gekko and relentlessly pursue your happiness.” Certainly greed is not a new phenomenon. But as evidenced by such messages propagated by mainstream media, it would seem that there is much more acceptance, even endorsement, of it in recent times. This shift in cultural thinking may be directly traced to the neoliberal revolution that has influenced, even determined, the global economic agenda in the last three decades.

By promoting itself as the principal arbiter of knowledge and by privileging quantification over qualitative and ethical criteria and methodologies, modern science has also contributed much to this culture, observed Korean-Brazilian theologian Jung Mo Sung (in Peralta and Mshana, eds. 2013, forthcoming). Today, quantity is synonymous with quality, and greed for more has become the foremost way to self-fulfillment, corporate and national success: the notion that “more is better” holds incredible sway.

III. Is there a role for world faith and religions?

What does all this mean for world faiths and religions? Without a doubt, faith has an important role to play in addressing the roots of the economic, social and ecological crises, which, at heart, are moral, spiritual and ethical.

The core of Christian teachings calls us to walk in love and justice in our relationships with fellow human beings, with the rest of creation and with God, to love our neighbours as we love ourselves (Mark 12: 31) . Jesus reminds us: “What you do to the least of them, you do to me” (Matthew 25: 40). Further, the bible tells us to “do nothing from selfish ambition or conceit” and to look “not to your own interests, but to the interests of others” (Philippians 2, 3).

Yet Christians do not have a monopoly over the concern with systemic greed and the work of promoting human dignity, social justice and care for creation. These are also shared by other world faiths, such as Islam and Buddhism, which not only emphasise restraint or moderation in human behaviour, but also, and more profoundly, humanity’s responsibility to the impoverished, to each other and the whole creation, and therefore to present and future generations of living beings.

As the findings of the conference on “Muslims and Christians Engaging Structural Greed Today”[1] declared: “Greed as a form of structural impoverishment and social depravity is an impediment to the generous giving that should define human economic activity. Greed is a form of debilitation whenever it ruptures the common good in favour of personal interest… [S]tructures of greed are grounded in this rupture, so that greed is understood to be a virtue, and generosity a naïve value of the lesser equipped. But this rupture and reversion is contrary to the shared core of the Muslim and Christian value of the human being in relation to God and society” (WCC and LWF 2011).

In Buddhism the notion of what is economically efficient is turned on its head. Apichai Puntasen (2008), a leading Buddhist economist, opined that the principle of efficiency ought to apply to consumption, and that the most efficient form of consumption is that which is informed by needs and which is adequate to maintain healthy bodies and minds as well as healthy and happy communities and ecosystems. According to Buddhist principles, consumption over and beyond this point could be described as greedy.

In our contemporary capitalist societies, religious institutions have the special task of countering the ‘culture of greed,’ particularly the “spirituality of globalised consumerism,” as termed by Jung Mo Sung (2011), and generating a culture of well-being and sufficiency, in part by unmasking the falsehood disseminated by the current financial and economic order which proposes that greater consumption and financial success lead to complete fulfilment and happiness (Peralta and Mshana, eds. 2013, forthcoming). Moreover, in today’s complicated economy where we often fail to see the structural connections between our desire to improve our living standards and the poverty suffered by our neighbours, religious organisations have the responsibility of making visible the experiences of our brothers and sisters who dwell in the socio-economic margins. They must help “those who are captives of the spirituality of consumerism to understand the dehumanising consequences of their pattern of life” (Raiser 2011).

When it comes to addressing the structural dimensions of greed, plenty more has to be done. Religious organisations have to make their presence felt in the political arena, advocating in partnership with civil society for the creation and implementation of policies to avert and penalise greed in markets, and helping to imagine new financial and economic frameworks that serve life.

With regard to the latter, much could be learned from the concept of an Islamic gift economy and the prohibition on charging interest or riba which is actually common to both Qur’anic and biblical teachings (though Calvin’s interpretation of biblical teachings on usury is said to have precipitated the development of a modern, capital-based economy) (Mshana and Peralta, eds. 2013, forthcoming). Much could also be learned from Buddhist economics of sufficiency and alternative conceptions of well-being.

IV. Towards a just, democratic and sustainable regulatory framework

The global financial and economic meltdown (as well as a looming global ecological meltdown) has brought to fore the essential need for global economic ethics – for justice, democracy and sustainability in the global economy.

In 2009, the manifesto entitled “Global Economic Ethic – Consequences for Global Business” was launched at the United Nations headquarters in New York. The first article asserted: “The ethical goal of sustainable economic action, as well as its social prerequisite, is the creation of a fundamental framework for sustainably fulfilling human beings’ basic needs so that they can live in dignity. For that reason, in all economic decisions the uppermost precept should be that such actions always serve the formation and development of all the individual resources and capabilities that are needed for a truly human development of the individual and for living together happily.” The WCC was one of the initial signatories, but many organisations and companies have signed up to the manifesto since then. Notions of corporate social responsibility and green consciousness in businesses have also proliferated.

While these efforts are admirable for challenging the ‘culture of greed,’ there remain, however, severe limitations to voluntary and ‘self-policing’ mechanisms such as codes of ethics. As Frank Stillwell (2012) said, “unless and until ethical behaviours become integral to how markets function – by directly affecting ‘shareholder value’, for example – it is hard to see the overall effect as much more than window dressing for ‘business as usual.’”

So, yes, we need new global economic ethics. But the more critical gap demanding our paramount and collective attention is the task of constructing an international financial and economic regulatory regime founded on shared societal values. Ultimately, what the world needs are structural changes in the financial and economic architecture that can be promoted by an ethical global regulatory framework.

In 2009, the WCC issued a landmark statement on “Just Finance and an Economy of Life.”[2] It appealed for an ethical, just and democratic international financial regime “grounded on a framework of common values: honesty, social justice, human dignity, mutual accountability and ecological sustainability” and that “account[s] for social and ecological risks in financial and economic calculation; reconnect[s] finance to the real economy; and set[s] clear limits to, as well as penalise[s], excessive and irresponsible actions based on greed.”

The statement endorsed practical reforms in the financial and monetary system including, among others: regulating the movement of volatile, speculative capital flows through the implementation of a financial transaction tax (which would also help to ease sovereign debt loads and enable governments to finance social protection policies); revising taxation systems and promoting financing transparency by establishing an international accounting standard requiring country-by-country reporting of transnational companies’ economic activities and taxes paid; exploring the establishment of a new global reserve system; and developing and applying indicators that better capture socio-economic and ecological progress than the money-centric gross national product.

Together with the World Communion of Reformed Churches, the Council for World Mission and the Lutheran World Federation, the WCC continues to contribute to the discussions on building an alternative international financial order that ensures equity between and within nations in all aspects of economic life as well as the democratic functioning of global financial institutions. In 2012, the aforementioned faith-based organisations jointly convened the Global Ecumenical Conference on a New Financial and Economic Architecture in Sao Paolo, Brazil to identify criteria and prepare an ecumenical plan for transformation, resulting in the “Sao Paolo Statement: International Financial Transformation for an Economy of Life.”[3]

The Sao Paolo statement endorses the creation of a United Nations Economic, Social and Ecological Security Council, where pressing economic, social and ecological issues would be brought together to be discussed and acted upon in a coherent way; in effect, an attempt to re-embed the economy in society and society in ecology. The statement also calls for the creation of an International Monetary Organisation which would have oversight over monetary policies and would deploy funds without structural adjustment conditions to establish an effective, stable, fair and socially responsible global financial and economic architecture.

Because issues of ethics “necessarily intervene between economic means and social ends” (Stillwell 2012), Christian and other faith-based institutions and organisations have to work relentlessly together with people’s organisations and movements towards setting up a global financial and economic regulatory framework grounded on justice and sustainability.

Insofar as the socio-economically vulnerable and women are among those most affected by financial and economic policies, ensuring their participation and making explicit their voices in the ongoing discussions on reforming and transforming the international financial system are vital to the process.

From a gender-just perspective, one of the primary challenges is to go beyond financial ‘quick fixes’ and narrowly targeted ‘add-on’ social policies that deal with the immediate fall-out of financial crises and serve primarily to alleviate their effects (for instance, making microfinance available to women living in poverty). In the long-run what is envisaged is an international financial order that does not finance monetary or economic expansion for its own sake, but values and therefore invests in social reproduction and in ecological sustainability. Because when we go back to our religious and spiritual teachings, it becomes crystal clear that the economic objective has never been monetary and material accumulation, profit or growth, but, rather, provisioning for healthy, peaceful (therefore equitable and free) communities embedded in a flourishing ecology. Realising this vision entails, as an initial step, redefining what we mean by ‘wealth,’ ‘efficiency’ and ‘risk’ – as much as redefining economics itself – to consider the social reproductive and environmental dimensions.

Perhaps it is fitting to summarise as well as conclude this presentation with a bunch of questions rather than answers. What is it really that we, as societies, consider valuable? What do we mean by ‘wealth’? What are the real costs and risks that we must account for, anticipate and insure against? How do we, as societies, manage and allocate wealth as well as risks in a just, caring and sustainable manner? How do we confront systemic greed, practically but also by digging deep into the resources of our faiths? Finally, how do we challenge faith-based and religious institutions to critically reflect and contribute on these fundamentally ethical questions?

Great article with strong challenges – we do not discuss the questions she raises enough. The present global economic structures to which India is party is at the heart of greed…..and to corruption. We have as the middle class in India been obsessed about corruption without addressing the bigger picture that this blog so well puts before us for our consideration. thank you Athena!

I posted this reply on Facebook on Sept 30: A very lucid and compelling brief article! Thank you, Athena! I also “shared”, and several friends posted their appreciation. You’ve prompted a lot of needed reflection on this crucial topic!